Economic Survey says need for 'viable, cost-effective' housing in India
New Delhi/Bangalore, July 22, 2024
Going forward, the demand for housing is expected to be driven by affordability and increased access to credit, it said
Amid rising urbanisation, there is a need for viable and cost-effective housing in India, the Economic Survey released on Monday said, adding that the outlook for the sector in India was "encouraging".
"As per the United Nations, by 2050, half of India's population is projected to dwell in urban regions, compared to 31 per cent in 2011," the survey said.
"This underscores the need to adapt strategies and policies to meet the rising demand for housing and offer viable, cost-effective, sustainable solutions."
This comes at a time when India has been recording record high sales and launches of residential properties. In 2023, a total of 410,000 homes were sold in the top eight cities, the highest since 2013. Moreover, a record of 520,000 units were launched in these cities, against 430,000 in 2022.
The survey said that sustainability and technology have emerged as "significant disrupters" for the real estate sector.
"Sustainability will influence green construction practices and energy-efficient designs, while technology will revolutionise smart homes and data-driven insights. With more significant environmental concerns, the focus will be on energy-efficient systems, rainwater harvesting, and smart building technologies," it added.
It said that there have been several factors behind the success of the housing sector in India. These include Pradhan Mantri Awas Yojana-Urban (PMAY-U); policy reforms like the Goods and Services Tax, Real Estate (Regulation and Development) Act and the Insolvency and Bankruptcy Code, and initiatives like the Affordable Housing Fund and Special Window for Affordable and Mid-Income Housing (SWAMIH).
However, it acknowledged that legacy stalled real estate projects are a concern, saying that 410,000 stressed dwelling units, involving Rs 4.1 trillion, are affected by this.
To tackle this, a committee established by the Ministry of Housing and Urban Affairs (MoHUA) has recommended measures like mandatory project registrations, financing stalled projects, and using the Insolvency and Bankruptcy Code (IBC).
The survey also said there is a need to enhance urban infrastructure in tier-2 and tier-3 cities. Prashant Sharma, president at NAREDCO Maharashtra, said that it aligned "perfectly" with the real estate sector's goals of "promoting balanced regional development and addressing urban migration challenges."
The survey noted, "Going forward, the demand for housing is expected to be driven by affordability and increased access to credit."
Vimal Nadar, senior director of research at Colliers India, said that with benchmark lending rates being stable for over a year, affordability has remained intact.
"In fact, the home loan market is estimated to witness sustained CAGR of 13-15 per cent and cross Rs 40 trillion by FY26," he said.
"The upcoming Union Budget comes at a critical juncture, wherein all real estate segments are hopeful of getting a policy-level push supporting an accelerated growth trajectory in the next few years," he said.
Finance Minister Nirmala Sitharaman will present the Union Budget on July 23.
[The Business Standard]
